Benefit data reveals impact of prostheses price cuts

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The pricing reform to the Prostheses List announced by health minister Greg Hunt last year has been reflected in the latest data from the Australian Prudential Regulation Authority (APRA).

Under the reforms, medical device companies agreed to significant reductions in return for a strategic agreement including a review that could lead to an expansion of devices included on the Prostheses List.

The reforms were forecast to deliver insurers savings of $180 million in 2018.

According to APRA's Private Health Insurance Prostheses publication, which shows the benefits paid for prostheses, the average benefit paid by insurers for prostheses fell by almost 10 per cent over the 12 months to the end of September 2018.

In the September 2017 quarter, private health insurers covered 618,000 prostheses in private and day hospitals with an average benefit of $750.

In the September 2018 quarter, they covered 683,000 services with an average benefit of $677.

A closer look at the data reveals the impact on some individual categories.

The average benefit paid for cardiac prostheses fell by almost 18 per cent, while hip and knee fell 5-6 per cent.

Private health insurers are pushing for further reform of prostheses pricing to force further reductions.

The medical device sector is backing a proposed review by the Australian National Audit Office to "examine whether the Department of Health has obtained assurance that the financial benefits from the Prostheses List reforms accruing to private health insurers have been passed on to consumers in the form of premium reductions."

Department of Health officials told Senate Budget Estimates in May they were "absolutely sure" reductions had been passed on in the form of lower premium increases.

They said insurers had "identified" and quantified the impact on premiums in their submissions for this year's 1 April increase.